Two major recent studies, Kaiser Family Foundation and American Academy of Actuaries, summarized 72 carriers’ 2023 health care cost predictions. Each year, health insurers submit rate filings to state regulators, detailing their expectations for the coming years’ health costs. These reports disclose the cost drivers for the coming year, including inflation, COVID-19 and policy changes.
Health insurers are proposing to raise premiums in 2023, more than in recent years. The median proposed increase is 10%. The primary factor is health care cost inflation, caused by rising prices charged by providers and pharmaceutical companies. Increase demand for telemedicine and mental services are also a factor. Providers are increasing salaries to recruit and retain staff, especially hospitals. The prices for their supplies are being impacted by the general inflation in the economy, recently reported at 9.1%, highest since the early 1980’s.
Actuaries are keeping a watch on COVID-19. In particular the post-COVID demand for elective medical procedures and the potential for new variants to either be vaccine resistant or not deterred by natural immune response. After a few years of low premiums, it appears that 2023 premium rates will rise significantly. Most carriers are suggesting rate increases ranging from the high single digit to the low double digit. Most of this from rising health cost and utilization.
